The Brazilian government announced a plan for the reduction of airfares, which will include more recurring promotions throughout the year. The agreement had already been prepared since the executive branch began to worry about the recurring impact of airfares on the rise in inflation.
Now, Minister Silvio Costa, of Ports and Airports, announced the first results of meetings with Azul, GOL, and LATAM, which, according to a report by our affiliated media in Brazil, Aeroin, have committed to providing larger quotas of promotional tickets.
As disclosed by the Ministry and the CEOs of the airlines, Azul will offer 10 million seats for up to 799 Brazilian reals (USD 1 = BRL 4.90), GOL will have 15 million tickets for up to BRL 699, and LATAM opted for a different approach: it will have a promotion per week for a predetermined destination with tickets up to BRL 199.
The points of LATAM Pass will also remain valid as long as the passenger continues to fly with the airline once every 2 years. Azul and GOL have not yet announced measures related to TudoAzul and Smiles.
It is worth remembering that the current average fare according to ANAC is BRL 747, exactly within the range of promotional fares of Azul and GOL. It was also not reported how the volume of the 25 million promotional tickets compares to the number of tickets sold today in the same price range.
The institutional position of the airlines
From the Brazilian Association of Airline Companies (ABEAR) they clarified the current scenario of the price of air tickets in Brazil, which follows a movement similar to other markets around the world.
“The measures announced by the airlines show the cooperation of the aviation sector with the agenda of democratizing aviation, but it is important to highlight that only with structural and long-term actions the sector can effectively reduce costs, a necessary condition for growth and to recover its offer conditions,» said ABEAR president Jurema Monteiro.
«Previously, the companies had already committed to the Federal Government to offer lower fares through Voa Brasil (up to R$ 200.00) and will increase their promotions for all audiences. The intermediate fares (up to R$ 800) will have almost 30 million seats, and for the higher bands, benefits and additional services were announced, such as luggage dispatch and free seat assignment,” she added.
Trend of ticket prices
In the accumulated from January to September 2023, airfares in Brazil are 7.9% lower than in the same period of 2022. The fare bands also show that there is a diversity of prices, with 54% of the tickets sold below R$ 500.00 and 85% below R$ 1,000.
Considering the historical series of the National Civil Aviation Agency (ANAC), it is evident that the average fare follows external effects, since aviation is a sector strongly affected by the dollar exchange rate, which represents 60% of the costs of an airline, and by fuel which represents 40%. The average domestic fare in 2023, from January to September, had an increase of 14% compared to 2019 (pre-pandemic year). On the other hand, the QAV, in the same comparison, rose by 86%.
Worldwide, airlines still seek to neutralize the impacts generated by the biggest crisis in their history. In the United States, for example, the average airfare for the second quarter of 2023 remains 10% higher than in the same period of 2019. Meanwhile, in Brazil, the average value of tickets has not increased. A study by the aviation analysis company Cirium reveals that the average prices of tickets for hundreds of the world’s most popular routes have increased by 27.4% since the beginning of 2022.
